My quick Haystack story

[MrMagic]

hey hope everyone is enjoying their summer, So yesterday (Thursday) I was in the area and decided to swing by haystack to see what was going on, I havent been there since their last season under ASC march 2005 ( I think) that year I skied haystack I think like four or five times, had a blast. Well the haystack club did do a lot of work, they put a massive entrance gate up, paved the road and spent about 3 mil. In landscaping, and putting in roadside lights. I was surprise to find the gate open, I went to where the old lower baselodge use to be, which now houses a small wooden structure complete with extensive landscaping and such, there was about 10 cars in the lot and the door open, so I walked in to see if I could get a brochure on the haystack club, there was about 10 gentlemen in suits having a meeting and enjoying some sort of catered lunch one person saw me as a walked in and came over to me, to ask what I needed, I inquired about a brochure or folder, he said there was none, and no information could be given, there were tri-fold brochures and trail maps all over the desk by the entrance but he said I could have one of those either and to try the haystack golf club .

HSGC it was, I asked the young man, about having any info on the ski club as I was asking the phone ranged he answered it, it was some women inquiring about the haystack ski club, the man, gave her a number to call. After he hung up the phone I said sounds like she was looking for the same kind of thing, he said no she was from accounts payable and she is looking for her money. We both laughed, and he asked if I walked into the “big” meeting, I said yes, he told me that the meeting was between the current owners of the mtn and potential new owners and new investors, to try to get the area back up and moving. Well that’s a bout it,

Who knows how much is true, but we will see, what becomes of the stack, if there are new owners you can say you read it here first at alpinezone.com !!!!!!!! ha ha

Cheers!!
-chris

 

[riverc0il]

Nice reporting, Chris. The current owners could have hired AZ.com as a consultant and been told that they wouldn't get far with their original plans. Good luck to them selling at a loss and finding a buyer that can do the place right.

 

[wa-loaf]

I think you deserve an "AZ Special Investigator" badge!

 

[snowman]

If I was sitting on the buyers side of the table I would think to myself "what a cheezy way to try to up the price, hiring some schmuck to wonder into the meeting to try and make it look like there's a bunch of interest in the resort still" :lol:

 

[marcski]

Nice reporting, Chris. The current owners could have hired AZ.com as a consultant and been told that they wouldn't get far with their original plans. Good luck to them selling at a loss and finding a buyer that can do the place right.

What makes you think they'd sell at a loss. Remember Steve, they only paid $5 mil for that place. Nothing in the scheme of things.

 

[riverc0il]

Given how much money they put into the place, I would be surprised if they sold for a profit. Remember, they may have bought the place for only $5 million but have probably invested double that amount in construction, labor, infrastructure, cleaning, advertising, etc. If they were to sell and could recover everything they put into the place, I would be amazed. I don't think they have generated any revenue from the place yet unless some dopes actually signed on the line to buy new housing?

This was interestingly enough something S and I noticed while researching condos in the area. Many folks invested a HUGE amount of money into some units trying to increase the property values. But those properties just would never be worth the asking price based on a number of factors. There is a point of diminishing returns in which enhancements in a property will not return increased value depending upon a number of factors and I think Haystack is definitely way beyond that point.

 

[threecy]

5 mil for Haystack isn't exactly a bargain

 

[drjeff]

5 mil for Haystack isn't exactly a bargain

But for what at the time was a "turn key" ski area with 3 basically modern lifts, a solid snowmaking system + water, and funational and reasonably sized base lodge, and a decent amount of surrounding developable land, not a bad price either.

I think that what will ultimately lead to the NELSAPing of Haystack, unless of course Tim Boyd and Peak Resorts wants to allow for some competition right down the street, is the cluase in the contract that Haystack has to be operated as a PRIVATE ski area for x number of years. That's going to make it a tough sell for any new potential owner, and just for the current owners to recoup they're investment, any people buying it now will be doing so for something north of 15 Million.

 

[big_vert]

But for what at the time was a "turn key" ski area with 3 basically modern lifts, a solid snowmaking system + water, and funational and reasonably sized base lodge, and a decent amount of surrounding developable land, not a bad price either.

I think that what will ultimately lead to the NELSAPing of Haystack, unless of course Tim Boyd and Peak Resorts wants to allow for some competition right down the street, is the cluase in the contract that Haystack has to be operated as a PRIVATE ski area for x number of years. That's going to make it a tough sell for any new potential owner, and just for the current owners to recoup they're investment, any people buying it now will be doing so for something north of 15 Million.

"Haystack has to be operated as a PRIVATE ski area" - So Haystack will have to fight it out with Stratton for the highest gaper/skier ratio in VT? Tough choice, but most of the NYC poser / lawyers have already made the "investment" in Stratton, so Haystack's probably screwed.

 

[riverc0il]

Is that Haystack clause still valid now that ASC is gone? That really stinks for the consumer if that is the case. I understand why ASC may have made that a condition of the sale to avoid competition with Mount Snow but that is really terrible to have a lingering effect from a company like ASC that bit it just a year after dishing the ski area.

 

[threecy]

Is that Haystack clause still valid now that ASC is gone? That really stinks for the consumer if that is the case. I understand why ASC may have made that a condition of the sale to avoid competition with Mount Snow but that is really terrible to have a lingering effect from a company like ASC that bit it just a year after dishing the ski area.

If anything, it boosted the value of Mt. Snow (if that clause indeed is still valid) - no chance of the neighbor undercutting you (but, the ability to void that clause if the new buyer were to buy Haystack as well).

 

[riverc0il]

Good point regarding value of the new owner of Snow. Probably would have sold for a lot less with a neighbor in direct competition.

 

[drjeff]

My guess is that Peak Resorts is well aware of that clause in the original sale of Haystack that ASC did, since in addition to the "private ski area only" clause was a second clause allowing Mount Snow to keep drawing water from the snowmking pond at Haystack and piping it the 2 odd miles up Handle Rd to Mount Snow.

There was a set amount of time (5 or so years or until the Somerset Reservoir pipe was completed whichever came first if I remember correctly), and a set amount of water per year they could use, but I'm just about postive that the lawyers that handled the deal for Peaks would have made sure that the private ski area only clause transferred to the new deal, and given the state of dissarray that The Haystack Club was in earlier this year when the Peak Resorts-ASC negotiations were going on, I doubt that they were doing too much legal maneuvering at that time.

 

[amf]

So what's to keep it from being a "private" ski club that sells $10 memberships?

I live near a dry town that recently had a golf course built. They were able to get around the liquor license issue for their dining room - which is quite good - by making it a private club w/ a $10 "social" membership, which basically allows you to order a drink at the bar.

 

[millerm277]

So what's to keep it from being a "private" ski club that sells $10 memberships?

That's what I'm wondering...a private club that sells $500 memberships for 6 months, or $30 a day....?

I'd guess that the contract probably has enough restrictions on it so you can't do something like that though.

 

[MikeTrainor]

Sometimes having a second mountain in an area could be a good thing. For example I don't think I would visit the mad river valley as much if it was just one mountain. That is why I go there over other places because I can ski Mad River for a day.

 

[threecy]

Sometimes having a second mountain in an area could be a good thing. For example I don't think I would visit the mad river valley as much if it was just one mountain. That is why I go there over other places because I can ski Mad River for a day.

Stratton's right up the road

 

[ctenidae]

the cluase in the contract that Haystack has to be operated as a PRIVATE ski area for x number of years. .

I think you may be mistaken, there- nothing about that clause here:

"10. Commitments and Contingencies

During March 2005, the Company's subsidiary, Mount Snow Ltd. (Mount
Snow), entered into a purchase and sale agreement for the sale of the assets of
Mount Snow comprising the Haystack ski resort to Tyringham Ridge, Inc. (Buyer).
The agreement provides for a $5.0 million purchase price, subject to certain
customary adjustments. The agreement includes a two year right of first refusal
in favor of the Buyer for certain developmental land owned by Mount Snow (but
not used in its ski resort operations) known as the Howe Farm. Under the terms
of the agreement, Mount Snow will continue to be allowed to withdraw water from
sources at the Haystack resort after the closing in amounts which approximate
Mount Snow's historical use from this source. In addition, Mount Snow will
retain a right of first refusal to reacquire the Haystack resort (not including
certain developmental real estate assets) for not less than twenty years
following the closing. The closing on the sale of the Haystack resort is subject
to the Buyer's completion of a 90 day due diligence period as well as
satisfaction of customary contingencies. Net proceeds to the Company from the
sale of the Haystack resort are expected to be used for additional liquidity, to
fund capital expenditures and reduce senior debt, each as permitted under the
Company's Resort Senior Credit Facility. The sale is expected to close in June
or July 2005."

From the Q3-05 10Q report. Some water rights and rights of first refusal, but that's it.

 

[MrMagic]

quick question: a little off topic any one remember how much it was going to cost to join the Haystack club? cant find it on their website. not that it matters much now

 

[ctenidae]

quick question: a little off topic any one remember how much it was going to cost to join the Haystack club? cant find it on their website. not that it matters much now

http://forums.alpinezone.com/12610-haystack-club-anyone.html?highlight=haystack+membership

Earlybird was $60K, $8,500/year after that.

Ouch.